November 14, 2008	Friday	Ziqa'ad 15, 1429

KARACHI, Nov 13: Many stakeholders have raised questions about the validity of a public hearing of the Sui Southern Gas Company’s review petition by the Oil and Gas Regulatory Authority (Ogra) as they considered the “Ogra bench” not duly constituted and lacked quorum, referring to the Article 4(1) of the Ogra Ordinance.

On Monday, when the SSGC’s review petition seeking an increase of Rs97.73 MMBTU in the prescribed price from Dec 1, 2008 to overcome the shortfall of Rs22,262 million came up for hearing before Ogra, Member (Finance) M.H. Asif chaired the meeting. Beside him was Member (Gas) Syed Hadi Hasnain.

Mr Nisar Sheikhani, chairman of the Site Association, said that he had gone to present his organisation’s views on review petition but when he saw only two members sitting on the bench, he wondered whether or not the holding of the hearing legally valid, especially when Ogra was still without a chairman.

He then referred to Article 4(1) of the Ogra Ordinance which said: “Chairman and two other members shall constitute a quorum for a meeting of the Authority requiring a decision by the Authority.”

The stakeholders maintained that the hearing also did not meet the requirement of Section 4(2) which stated: “Decision of the Authority will be taken by the majority of its members and in case of tie the member presiding shall have a casting vote.”

They, therefore, argued that the quorum was not complete in accordance with the article as the chairman was not appointed and the vice-chairman was not present.

Mr Sheikhani was of the view that even the SSGC petition was anfractuous because the whole basis of calculation of tariff in the weighted average price was based on assumptions with regard to cost of gas from Qadirpur gas fields. The SSGC had included it although the price had not been notified for some time and the previous price was nearly half of what the SSGC had quoted in the weighted average price.

He maintained that if the price had not been notified by the Authority and if the petitioner had quoted a price, then the question was whether the petition was maintainable or not.

In this context, he referred to Rule 1 which read: “Evaluation criteria: (1) All petitions filed under the rules shall be evaluated by the Authority on the basis of and in accordance with the following criteria:

(j) Only such capital expenditures should be included in the rate base as is prudent, cost-effective and economically efficient.”

He argued that the cost-effective or for that matter, prudent capital expenditures, were assessed from the point of view of the petitioner but what about the stakeholders, the consumers of natural gas?